SEC CHARGES OFFSHORE HEDGE FUND AND ITS 26 YEAR OLD MANAGER WITH FRAUD, OBTAINS EMERGENCY RELIEF

On November 13, 2001, the Securities and Exchange Commission filed an emergency enforcement action in the U.S. District Court for the Southern District of New York and obtained a temporary restraining order prohibiting Peter W. Chabot ("Chabot"), manager of a purported offshore hedge fund named Sirens Synergy and The Synergy Fund LLC (the "Fund"), from engaging in the fraudulent offer and sale of securities. The Commission also sued and obtained temporary restraining orders against the Fund and against Chabot Investments, Inc. and Sirens Investments, Inc., two investment entities associated with Chabot and the Fund.

The Commission's complaint alleges that, beginning in 1999, Chabot, individually and through his entities, raised over $1.2 million from approximately 14 investors by making material misrepresentations and omissions to them concerning the Fund. Chabot claimed he was an experienced trader and that he had developed a mathematical model to predict when to buy stocks and whether to take long or short positions. Chabot then prepared false and misleading account statements for the investors, claiming large returns on the purported investments made by the Fund. By July 2001, account statements sent to investors claimed that the Fund had assets exceeding $130 million.

As alleged in the Commission's complaint, Chabot did not buy stocks or other securities with investors' funds. Instead, he used their money for his personal expenses. Chabot spent over $100,000 on consumer goods and services, including computers, clothes (such as Armani suits), travel to Spain, France, England, and the Caribbean, limousine services, New York Knicks basketball games at Madison Square Garden, furniture, oriental rugs, and jewelry. Chabot also made over 130 ATM withdrawals totaling nearly $60,000 from a bank account containing investor funds. On November 5, 2001, Chabot was arrested in Mississippi on his way to Mexico and charged with one count of securities fraud.

In addition to temporary restraining orders prohibiting further violations of the antifraud provisions, the Court ordered an asset freeze, expedited discovery, an accounting, and other interim relief. The Commission also seeks the following permanent relief: (i) permanent injunctions against future violations of Section 17(a) of the Securities Act of 1933, Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, and Section 206(1) and (2) of the Investment Advisers Act of 1940; (ii) disgorgement and prejudgment interest; and (iii) the imposition of civil money penalties.

The Commission wishes to thank the U.S. Attorney for the Southern District of New York and the Federal Bureau of Investigation for their cooperation in this matter.